FAB Corporation will need 200,000 Canadian dollars (C$) in 90 days to cover a payable position. Currently, a 90-day call option with an exercise price of $.75 and a premium of $.01 is available. Also, a 90-day put option with an exercise price of $.73 and a premium of $.01 is available. FAB plans to purchase options to hedge its payable position. Assuming that the spot rate in 90 days is $.71, what is the net amount paid, assuming FAB wishes to minimize its cost? A. $152,000. B. $144,000. C. $150,000. D. $148,000.

Doctor Dumpkins is bullish on the British pound so he sells a one-month put for $0.03. The strike price of the call is $1.24. On the expiration day, the spot price of the British pound is $1.27. Calculate the break-even price, the option payoff at expiration, and the net profit at expiration.

Nucor Corporation would like to use options to hedge a 18,324,000 Philippine Peso payable. Both call options and put options have the premium of $0.002 (per unit of Philippine Peso) and the exercise price $0.019 per Philippine Peso. The option will not be exercised until the expiration date, if at all. Should Nucor Corporation buy call options on Philippine Peso or buy put options on Philippine Peso? If the spot rate at the time of maturity is $0.017 per Philippine Peso, what is the total amount paid by the corporation if it acts rationally (after accounting for the premium paid)?   Buy call options on phillipine peso 348,156   buy put options on phillipine peso 384,804   buy call options on phillipine peso 274,860   buy put options on phillipine peso 311,508

As a major maker/manufacturer of premium leather hand luggage, you are concerned that leather prices may move beyond their current level of $30/pound when you are ready for production. Therefore, you enter into the appropriate option contract. The strike price is fixed at the current spot price at an options price of $5.00 per option. What is the position you take and your profit or loss, if eight months later, leather is selling at the spot market for $38.50? Olong futures, $7.50 Oshort futures, -$4.00 Olong call, $3.50 Olong call, -$5.00 O long futures, $5.00

Please show the steps and calculations

To find the quoted price of a 180-day T - bill with a 5% yield and the contract price for a $ 1,000,000 90 - day notional Eurodollar contract, we need to do a couple of calculations.

Assume that Promina Group expects to need NZ$943,000 in 6 months. The existing spot rate of the New Zealand dollar is $0.70. The 6-month forward rate of the New Zealand dollar is $0.72. Promina Group created a probability distribution for the future spot rate in 6 months as follows: FUTURE SPOT RATE PROBABILITY 28% 46% 26% $0.68 $0.73 $0.78 Assume that 6-month put options on New Zealand dollars are available with an exercise price of $0.73 and a premium of $0.04 per unit. 6-month call options on New Zealand dollars are available with an exercise price of $0.70 and a premium of $0.03 per unit. Assume the following money market rates per annum: US Deposit rate 7% Borrowing rate 8% Determine whether a forward hedge, a money market hedge, or a currency options hedge would be the most appropriate. NEW ZEALAND 2% 3% a. b. Compare the most appropriate hedge to an unhedged strategy and decide whether Promina Group should hedge its position.